CBP recently issued an Administrative Ruling Related to Domestic Warehouses and Fulfillment Centers impacting under what conditions shipments may be consigned to them utilizing the applicable de minimis entry regulations.
19 U.S.C. 1321(a)(2)(c) is the statute by which an entity – corporate or individual – is allowed to import $800 or less in merchandise per day into the United States without payment of tariffs. The $800 threshold is the current de minimis level – having started out at a meager $5 when originally passed into law as part of the Tariff Act of 1930. The $800 limit was one of the statutory changes imposed by the Trade Facilitation and Trade Enforcement Act, signed into law in 2015.
The explosion of e-Commerce platforms and marketplaces have led some parties to choose to import commercial merchandise into the United States and hold it in a warehouse pending the sale to US buyers.
Counter to the intent of the regulation, a single location may have been named daily for hundreds of shipments valued at $800 or less. This, combined with the entity named as the ultimate consignee, was causing CBP to question the methodology used.
The agency sought – and received – an internal advice ruling on the issue of consolidated shipments under a single master air waybill and bound for one or a handful of destination warehouses. In what many in the e-commerce and fulfillment world have been using to set policy and strategy, the argument was made that because there were multiple consignments from multiple sellers, each individual consignment should be considered eligible for duty-free entry. r
Ultimately the agency saw it differently, informing the ruling recipient:
“Accordingly, aggregate shipments imported by one person on one day and valued at $800 or less may be entered under informal procedures per 19 U.S.C. § 1321(a)(2)(C), provided that all regulatory requirements under 19 C.F.R. §§ 10.151 and 10.153 are met. An owner or purchaser of the shipment or shipments may be identified as the one person on one day under 19 U.S.C. § 1321(a)(2)(C). If an owner or purchaser is not identified, however, CBP shall use the named consignee to determine whether shipments are made in excess of $800 per person on one day.”
Alba Wheels Up has extensively researched the scope and limitations of this ruling and the legal options which are available to e-Commerce and marketplace shippers. It is important to note that under the ruling as written, individual warehouses and/or merchandise owners are only permitted to receive one shipment per day anywhere in the United States.
For sellers looking to hold stock or fulfill orders, this places strict conditions on the applicability of the de minimis rules. Fortunately, a number of alternative options exist which range from shipping the goods directly from overseas to the buyer by air or ocean, or evaluating opportunities to hold merchandise immediately outside the customs territory of the United States. This merchandise can be held in-bond and at the time of sale, be packaged, presented for entry with the appropriate level of detail on what entity caused the importation and then enter the United States for injection into the postal service or a courier or integrator for final delivery.
The rules governing eligibility are complex, requiring both expertise and the technology to automate a large number of transactions and keep costs of handling low. For Alba, we have worked with a number of clients and generated significant, seven figure savings by evaluating and modifying their e-Commerce and de minimis entry processes.
For more information, including a complimentary evaluation from one of our senior supply chain experts, contact Alba today.
